From questions about the value of Yahoo! to a belief that MSN will become just another Yahoo! brand, reactions to Friday's announcement that Microsoft is bidding for the Internet company has provoked sharp reactions from leading industry figures and social critics alike.
Nicholas Carr, a leading tech critic and former executive editor of the Harvard Business Review, believes that whatever the ultimate outcome of the transaction, the eagerness of Microsoft to launch such a bid "tells us a lot about the changing shape of business on the Internet and how competition is likely to play out in the future."
In particular, Carr says, Microsoft's linchpin "control of the PC operating system ... is far less important than it used to be." Now, he adds, the real business in software is increasingly becoming freeware, and the real money to be made in the technosphere is Web-based advertising.
Which is what leads Bruce Carlisle, CEO of Digital Axle, and marketing guru Jack Trout to suggest that Microsoft may well "dump its portal assets under the Yahoo! brand," as the combined firm goes after ad agencies in a head-to-head battle with rival Google.
The legal battle that's likely to be joined suggests to top Silicon Valley attorney Doug Cogen of Fenwick & West that the initial offering price represents merely the first shot across the bow of a "protracted and public negotiation."
At the same time, Dr Narayanan Jayaraman, professor of finance at Georgia Tech's College of Management, believes that there is unlikely to be "any other bidders for Yahoo!. Microsoft is one of the only companies with the kind of cash necessary."
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From Europe come the views of Ted Henneberry, a top attorney at Heller Ehrman who once served as director of the mergers and cartel enforcement divisions of the Irish Competition Authority. His view is that European authorities--who are still weighing Google's proposed acquisition of DoubleClick--will focus on whether a Microsoft-Yahoo! combination "holds a real potential for providing needed and effective competition in the face of Google's dominance."
A successful completion of this deal could lead to further consolidation among key players in this sector, according to Morton Pierce, chairman of Dewey & LeBoeuf's Mergers and Acquisition Group. A leading M&A attorney who worked on The Walt Disney Co.'s takeover of Pixar, he sees it as "unlikely that any regulatory or antitrust issues should arise with this deal" as the result of Google's domination of the search and online ad markets.
Finally, Clay Shirky, a leading academic guru of the Internet industry, believes that "it's hard to turn the obvious and real value these social applications generate into obvious and real dollars.
"If Yahoo! and Microsoft together can figure out how to make money with Yahoo!'s unique social platforms, they will have created some sustainable advantage. If not, well, $44 billion is a lot of money to pay for mere traffic."
